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tv   Bloomberg Markets European Close  Bloomberg  September 7, 2016 11:00am-12:01pm EDT

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close on bloomberg markets. ♪ we will take you from san francisco to new york and cover stories out of the u.k. and wrestles. here's what we are watching today. appearingark carney before the u.k. parliamentary treasury committee things confidence has improved because of the central bank's stimulus. we will examine his comments on policy post-brexit. vonnie: the final countdown is on for apple's full product launch. we are expecting a new iphone watches. consideringtors are a criminal charge related to hsbc's foreign-exchange debt.
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mark: 30 minutes left in the equities session. out the global macro mover. the ecb meeting tomorrow. mark carney is testifying in front of the u.k. lawmakers. against remaining low the dollar. bond yields creep higher. the yield is marginally higher. the big takeaway was carney commenting on his serenity. on the actions boe has taken. that's important today. i want to get to the big individual movers today.
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upres of by three point -- by 3.7%. it operates 85% of its revenue from the u.s. through its son rental facility. both technicians performing well. positive second-quarter momentum greater than earnings estimates. at 13 pounds. this is showing the u.k. homebuilders since exit. the third biggest home developer here in the u.k. beating estimates. the wider market for new homes remains health the across
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britain. levels of economic and political uncertainty. productionstrial fell by the most in more than two years in july. by 1.5 percent from the previous month. that's the data of the day from germany. just getting some breaking news. vonnie: another few comments from carney seem to be impacting the british pound. it is dropping quite substantially now. he says there is room to cut rates further if necessary. lawmakers had been questioning him about the impact to the consumer.
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here in the u.s. we are 19 minutes into the trading day. julie: the nasdaq is at another record. touching that level once again today even as the dow and the s&p 500 are off slightly. storiesok at some causing some movement today. chipotle is one of them. taking a 9.9 stake in the chain. up by nearlyof -- 6%. may reignite efforts to shake up the board of the company. analysts have said his involvement is going to be enough to turn this company around.
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also looking at the oil company. this discovery holds enough crude oil to supply every refinery on the u.s. gulf coast for a year. it is now devoting one quarter of its 2016 capital budget to this discovery in order to get that oil out of the ground. also watching delta today. seeing the airlines come back after the company gave updated forecast the effect that computer outage is going to have . unit revenue has seen a solid improvement from the summer. those shares are up by 6%. vonnie: let's check in with courtney donohoe. >> president obama is expressing frustration at delays in passing the transpacific trade deal.
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he spoke with a group of southeast asian leaders. agreement willde eventually be ratified. >> it's always going to be hard. nothing is easy in the u.s. congress right now. maybe there was a time when it was but i haven't seen it. it sure hasn't been easy since i've been president. >> the president also said the u.s. could be a force for great good but as the tendency to look inward. a new poll shows republican presidential candidate donald trump has a commanding lead among military voters. trump leads hillary clinton among veterans. military voters said they trusted clinton more to make the right decisions about using nuclear weapons. turkey's president says his
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country and the u.s. are considering a joint operation against the islamic states capital in syria. islamic state has turned the syrian city into a stronghold. hammond discussed brexit plans with a group of bankers. iserwards he says it important the u.k. maintained its place as a great place for financial services. mark: governor mark carney is defending his actions after the brexit vote. he has been testifying to lawmakers in london. his critics say he exaggerated
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warnings before the june referendum. he said the risk of recession has gone down partly because of boe policy. to representing all of it by any stretch of the imagination. part of it is there is a bounce back because the bank took timely conference of and concrete action. that action has had an impact. they have improved considerably since we acted. mark: let's get some perspective with jeremy, head of currency strategy at world first. the only real market moving statement came right at the end when he said the boe has room to cut the bank rate further if needed. need to cut rates further to whatever the lower bound is? >> we will only find out the
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true economic impact through october or november. into the inflation reports where if they are going they could forecasts easily take another .15 out of the bank rate. i'm surprised he said it was serene. he hasn't had much to do yet. we haven't had to deal with the impact. he got a pat on the back from one lawmaker saying on the day of brexit he came out with a totement very statesmanlike say the bank of england will provide liquidity. the fact that sterling was able to be traded showed the bank of england was there stopping exactly what was going on.
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were you even forecasting? is that at the window now? >> we are looking for very miniscule positive growth. the technical recession risk hasn't been completely allayed by a few straws in the wind. 2017going to move through when we have to look at unemployment and business investment. seemed to think that without a shadow of a doubt things would be worse if the bank of england hadn't done what it did in august. we don't get q3 numbers from the statistics office until the end of october. how do we know? >> i don't think we do know. that's the element of dealing in this strange twilight period the u.k. economy is going through.
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the businesses have to continue their operations based on the trading relationships they have with europe but they know further down the line confidence could be hit and costs are likely to increase. they may have to start laying people off. everyone is going, everything is ok at the moment. that lends itself to the fears about investment down the line. also spoke about the weakness in the british pound helping to make the deficit less than 4%. what do you think he thinks the fair value for sterling is? >> i think there is a little bit of air to come out of sterling. the governor is still planning another rate cut which could easily take another percent or two out of the pound.
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the bank of england does not have a suitable forecast model for political issues. we are going to be going through a lot more as we invoke article 50. mark: the criticism of carney pre-referendum was you are over-egging the potential possibilities of the effect on the economy. has beent post-brexit that the measures the boe enacted or unnecessary. are those criticisms fair in any degree or not? the criticism afterward that the bank of england has gone out and done too much too early and exacerbated the problem i think is unfair. we are not going to know for another 12 to 18 months. abouttinually talk
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central banks being behind the curve and not reacting to things that could damage their economy. maybe the bank of england has actually been the most responsible and making sure there was a buffer for the u.k. economy regardless of what happens. referendum he was doing his job presenting the risk to a country -- eight the country -- aid the country. vonnie: coming up, apple rolls out a series of product upgrades in a few hours. are live at san francisco to set the stage for ceo tim cook next. this is bloomberg. ♪
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mark: live from london, i'm mark barton. just under 15 minutes away from the european close. vonnie: in new york i'm vonnie quinn. we're watching shares of apple ahead of the product release today in san francisco. the tech giant battles and iphone sales slump. does ceo tim cook have enough tricks up his sleeve? is gearing up for the event. it is a special event. we are not expecting a massive refresh for the iphone this time around. is the strategy that people really need to upgrade now? will there be a huge upgrade next year? one of the big things
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apple announced last year was the iphone upgrade program. it is sort of a subscription service that allows people to upgrade to new phones every time there is a new one on a nearly annual basis. that gives people some incentive to get this year's phone. new features to steer is when we are expecting the big overhaul. vonnie: what do we really expect? mark: this year we are expecting the iphone seven and the iphone seven plus. they will look almost identical to last year's models but the backs are a little cleaner. new features like a pressure sensitive home button. a very significant camera upgrade with better low light zoom, finer deeper editing controls and no headphone jack. mark: mark, why do i need a dual camera system?
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why do i need a reengineered home button? why should i care about the removal of the device's headphone jack? mark: these are just a new .eature that apple is issuing it will be very much targeted to new iphone users and iphone users using models pre-2014. those people with older models are getting the features from last year's phone and this year's all combined. it's about giving customers something new every year. the new features will integrate with the software. it will be one of the top smartphone cameras on the market. it is a big deal for camera fans as well as technology fans and people wanting new phones. mark: is it going to prop up sales ahead of the expected iteration of the iphone next year? apple really wants to
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avoid a year-over-year quarterly drop in the holiday quarter of sales. that would be the first time that happened in nearly 15 years. they want to avoid that. the iphone seven combined with the other products we are expecting are designed to do that. vonnie: we will be keeping an eye on the new iphone. there is a new watch expected as well. don't miss our one-hour special on apple's product event today. join emily chang and the rest of the bloomberg team covering the event at 1:00 p.m. eastern. still ahead of why the government's agreement with hsbc that let the bank escape prosecution could be in danger of falling apart. are also watching boe
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governor mark carney and policy members testifying before a parliament committee. we will keep you updated on all the headlines. you can follow along on the bloomberg. they are talking about helicopter money. a comment here from our bloomberg gadfly editor. this is bloomberg. ♪
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live from london and new york, i'm vonnie quinn. i'm mark barton. u.s. prosecutors are considering a criminal charge against hsbc's foreign exchange deaths -- desk. they could upend an earlier deal that let them avoid prosecution. already been charged
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with improper trading. in the financial crimes reporter. why the sudden turnaround? it looks like there was immunity for a -- hsbc. of interesting. what a just with the department 2012stice dates back to and it's due to control failures around money laundering and sanctions violations. it's liket period you're on probation. if you commit a crime you could he charged with a crime and have that probationary agreement torn up. it would mean you would have a double charge. what happened with hsbc was a trade done in 2011 which that thethe agreement
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department of justice arrested two individuals on. now toey are looking at see how the bank handled that and if they handled it correctly. it could pullback that agreement. it is completely unrelated but it will impact their standing with the justice department. vonnie: did the justice department not know about this trade when the agreement had been reached? it appears hsbc did the right thing on this. they had a law firm come in and review it. the law firm said it did not see any illegal activity on this. hsbc reported this act to the justice department. at all thelooking issues related to how this was handled and if the foreign exchange traders were correctly punished. mark: what's the process here? how difficult is it to tear up a
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dpa? >> it's very difficult and not everybody is going to agree on this. there's going to be people in the department of justice that may say this is completely unrelated and needs to be handled separately. there's going to be others that will be pushing for it because it's really meant to be a deterrent. consequence ofa violating these maybe they're not that effective. probably appeal it. this if it did go ahead would ensure that its legal troubles i suppose haven't been put behind it which is severely problematic for the bank. >> it can be quite a complicating factor. as we know from the last couple of years almost every bank on wall street has a guilty plea under it belt.
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typically the banks can continue operating but they are expensive and complicated processes and you can lose access to some very lucrative business in the meantime. the hsbc charge could upend the 2012 deal. take a look at where european equities are heading as we finish the wednesday session. stocks are going to finish hard for the day in five. with hisey of course colleagues testifying before u.k. lawmakers. helicopter money is not an option. they have been grilled on the potential of helicopter money. this is bloomberg. ♪
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mark: live from london and new york you're watching the european close. i'm mark barton with vonnie quinn in new york. this is the stoxx 600.
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the volatility gauge traded 23 percent below its average before the ecb's last decision. volatility hasn't been this low in the days preceding and the ecb meeting since the start of qe in 2015. shows the stoxx 600 in the last year relative to its 50 day average. day 50 day the 200 moving average. something achieved on the 200 day only in the last. the 50 day crosses the 200 day that is bullish when it comes to momentum. confirmed by a tech strategist at day by day. she says european indices could outpace emerging-market indices. something i will ask matthew beasley about in a few seconds.
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have a look at how u.k. asset have fared since brexit. boe's is serene about the actions and comments since brexit. ftse 100 up 7%. the pound which measures sterling is down by 10%. of course if you measure it against the dollar we've got a minor sign against those assets. not as add as it was only a few weeks ago. data out of the ukip we would look at manufacturing. it was one of the weaker data points we have seen in the u.k.. cutting production in july. brexit trauma rocking the economy. is july.
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will we see a rebound in august? that's the question. the data has been stronger than expected. carney says the door is open to further rate cuts. admitted that the odds of a technical recession are less than they were before the referendum. he is feeling serene. vonnie: without a shadow of a doubt. there is no room for any doubt in his mind. i'm looking at the dollar index. it is up on the session. bond yields as well. that is actually higher than it was earlier today. the 10 year yield at 1.53%. this is all pretty supportive of gold. abover the price was 1350.
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the fed is putting off an interest rate increase for a couple of months. that has been weighing down the u.s. dollar and bond yields. declineeeing a slight for the dow and the s&p. the nasdaq is down about .1%. abigail doolittle is live in mid-town with more. abigail: we have the nasdaq really fluctuating searching for direction between small gains and losses. put in another fresh intraday record high. we will have to see how the day plays out. dragging sharply on the nasdaq is sprouts farmers market. on pace for its worst day in more than three years. levelr at its lowest ever. pretty significant cut. same-store sales down
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and revised earnings by about 10%. it looks like deflationary pressures along with promotional pressures are behind this. thatnalyst said in a note he thinks the slowdown also reflect a deep greece in traffic. another analyst likes the shares and would be buying this on weakness. sprouts farmers market is also weighing on a whole food is down about 5% at this point. in an e-mail earlier to our team and analyst said these grocers are different. the customers can withstand a higher price point. be thatstrategy could of a more traditional grocer. whole foods doesn't need to do this. he thinks the stock is down more than it deserves.
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looking at this chart we can see it has been a very rough last year for whole foods. today's weakness we have the stock nearly at the bottom of the range. the question is whether support will hold or not. time will tell. vonnie: thank you, abigail. let's get back to the studio. courtney donohoe has the first word news. herheresa may is playing cards close to the vest. lawmakers questioned her about whether the u.k. will try to remain part of this angle trading block when it leaves the european union. a i will not be giving running commentary and the government will not be giving a running commentary. and there's a very good reason for doing that. get the best deal. we want to get the right deal for the united kingdom. if we give away our negotiating
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hand that would not be what we would achieve. said itt secretary has is improbable that the u.k. can remain part of the single market if it wishes to regain control of its borders. angela merkel is defending her open-door the for refugees. she told lawmakers the government has done everything it can do to reduce the influx. she is on the defensive after her democratic party lost in the state election to the anti-immigrant alternative. prosecutors in sweden say they are waiting for a day to interview wikileaks founder julian assange. he is wanted for questioning over a rape in sweden. ecuador has given the go-ahead for an interview but has not said when. he is concerned you will be extradited to the u.s. if he leaves the embassy. tiger woods is about to start his come back. one-time top player in the
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world will play in the safeway open in florida. he has undergone multiple operations on his back. i'm courtney donohoe. this is bloomberg. stocks in europe. the fed will wait a little bit. emerging markets hitting the highest levels in 15 months. joining us now is matthew blease he. -- matthew beasley. i brought that chart up in my segment which shows the moving averages. that's quite exciting. now is theas said time to get into european stocks. they're going to outperform u.s. stocks as well. someave said you have sold
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of the most economic sensitive stocks that have been struggling for ideas in the region. does that make europe a no-no for the year? global investment is very easy to be cautious toward the u.s.. given how earnings appear to have been stagnating this year. prospect looked materially better. you that the valuation discount which will appeal to many global investors. if you are trying to play cyclical growth picking up when it comes to economic activity then emerging markets are still the best way to play that. mark: where are you by and what are you buying? we talk about emerging markets.
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it's very hard to talk about emerging markets as a homogenous asset class. we are seeing very different trends in different geographies. the oil prices moving substantially this year. oil exporters are positioned better than those who are importers. somewhere,ds out as increasingly we can see a path out for brazil. suffer as the oil price rises given that they are a importer of oil. point to certain geographies and it also comes down to certain stocks. it depends on the currency as well. you have taken a lot of different things into account. the worlde how well index has done and the emerging
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markets index has climbed twice as much. the games have come already for some emerging markets. are those played out now? >> we think they are not. we need to put this in context. the emerging markets underperformed in 2012 through 2014 and much of 2015. not surprising from a dollar if. -- perspective. were off valuations the extended bull run in emerging-market equities. of that iso much different. expectations for growth are lower. asia-pacific had its first quarter of beating earnings expectations in the last eight quarters. there is a sense of momentum
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building. they have used the last two or three years to rebuild lots of their challenges they were facing at the time. through thecoming risk reward is simply better in emerging markets then developed markets. vonnie: zoom in on a couple other countries for us. you mentioned brazil. as being and india importer of commodities and therefore not a place you might want to be invested. where else? >> it is worth looking at russia perhaps. structural up and evil perhaps getting in the way of sanctions imposed on that country. the pain has been taken by the russian authorities. russia is somewhere that we
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would consider as interesting. korea is a market that remains very cheap and has for quite a while. the sense of corporate governance reform from a low base. as an exportea driven economy remains very sensitive to any uptick in global trade. in light of mark carney's in front of u.k. lawmakers, he basically admitted they have helped asset prices. recession risk has receded. i really quickly changed my u.k. assets since brexit into dollar-denominated. i have been criticized for doing it in local currency. the ftse is down by 2%. the small cap is similar. the top one is u.k. bonds. the ftse 250 is the worst one.
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how are assets looking in sterling and in other currencies since brexit right now? >> what's interesting about the u.k. market is just how important currency has been for global investments. with so many non-u.k. sensitives in that index the ftse 100 has performed very well post-brexit. being serenernor about the economic outlook with no evidence of a concerted decline of the u.k. economy is not a surprise that some of these riskier assets have recovered so dramatically from their lows. we can certainly find companies we like in the u.k.. the uk's problems are perhaps still ahead of it and not exclusively behind it. we would be cautious in terms of where the uk's that's on our preferred list of geographies. mark: matthew beasley.
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vonnie: coming up, we have a new pairing. withchilcote faces off julie hyman and they are looking at sterling. this is bloomberg. ♪
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vonnie: time for our global battle of the charts or we take a look at the most telling charts of the day and what they might mean for investors. you can access these on the bloomberg. we have a different format today. i'm not the sole judge. kicking things off is ryan chilcote. ryan: we know there is a record
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number of short positions on the pound right now. we know the pound bears were right today. they have been wrong for the last month. this chart shows you the pound aboutt its peers rising 2.5% in lockstep with the increasingly surprising information we are getting from the economic data. data ther the economic more the pound has risen. you can put your shorts aside. you can travel. able to go places you didn't think you could afford to go with sterling just a month ago. mark: julie? he's calling it a winning chart. we will see how long your
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bond party last for your vacations. i'm talking about a bond party. it's not just in the sovereign debt market. the news really struck me this tok that these are the first non-bank companies to sell corporate debt at negative yield. we are looking at a proxy for corporate debt. this is the investment grade corporate bond etf here in the u.s.. it has enormous demand this year. you are seeing the flows in yellow. the price in white. the yield in blue just like we have seen all yields going down. people keep snapping up corporate debt just like they have been snapping up sovereign debt across the globe.
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julie's chart is so topical. it's mark carney's day. therefore i have to say it's ryan chilcote's day. it's also his first day. i need the guy to come back. vonnie: he's already accepting the garlands. i love your chart that i will give it to ryan because it is a illustration of what we are seeing in sterling. mark carney is still convinced it's going to help the reduction in gdp to below 4%. we'll have to see if that holds up. you are the winner today. mark: i have to sit next to him at work. his head is not going to fit. all of its raised
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losses for the year. highest level since december. this is the first major benchmark to do this. the dax raising its losses for the year ahead of the east he be tomorrow. this is bloomberg. ♪
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vonnie: live from london and new york, on vonnie quinn. mark: i'm mark barton. this is the european close on bloomberg markets. more headaches for credit suisse. a manager has filed a complaint accusing him of criminal mismanagement, forgery and breach of trust. among the clients of the banker are a georgian billionaire. meanwhile there has been another executive shuffle at the bank. joining us now is jeffrey.
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complaint against the former world fund manager, how much of a headache is it for credit suisse? i think it's on top of an existing headache. it's never good to have a fifth complaint when you already have four. terms of content i don't think it adds that much new. clearly these other very wealthy clients have already made it clear they asked that credit suisse to pay them back. it has already set aside about 250 million francs. .he clients want much more the courts will have to decide. mark: the other big bit of news replacing thesse head of their global markets division just 10 months after he got the job. what's behind this swift removal? i don't know if that's the
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only asked the nation for it but clearly the outgoing head of global markets which is the trading division had a lot of bad timing. rolese he came into this as the head of his own division just as markets were turning sour at the end of last year. credit suisse posted losses at that unit. to add insult to injury management said they hadn't previously been aware of the decisions that caused those losses. it seemed at the time he was being made a scapegoat. in a surprise to everyone that he had to leave today. vonnie: what is the new challenge? previously cohead of
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credit and head of securitized products at the bank. he was directly involved in some of these risky business is that also caused the losses. that theave to prove thel that managed to shrink business to such an extent that it actually returned to profit in the second quarter. he will have to prove he can continue on that course and keep the ship on an even keel. the potentially more difficult part of his job will be to read gain or maintain the trust of both investors and staff because with a 36% cut to the bonus pool in 2015 at the unit with remarks from the ceo that seem to indicate that he blamed traders
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and investment bankers for much it seems likeong he's got a tall order. thanks for joining. happening now, donald trump is speaking at the union league of philadelphia about military spending and defense the. that is before tonight's event. you can watch the full speech on the bloomberg at live go. emily chang and the rest of the bloomberg team will cover the apple event at one account p.m. eastern. p.m. eastern. this is bloomberg. ♪
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>> i'm matt miller. i'm scarlet fu. welcome to bloomberg markets.
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♪ scarlet: from bloomberg world headquarters in new york, welcome to bloomberg markets. we are covering stories from san francisco to rio de janeiro and beijing. matt: global stocks climbing to a 13 month high. chances the feds will raise rates later this month fade following a slew of weak u.s. economic data. aarlet: mike mayo of cialis gives his forecast. what it would take to turn bearish on banks. fall product launch gets underway in an hour. we are expecting phone and possibly new gear for listening. will it be enough to impress analysts and consumers? scarlet:


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